Education and Trade

• Main Authors: CHANG, Pao Li, HUANG, Fali
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2008
• Subjects: Education System; Trade Pattern; Talent Distribution.; Higher Education; International Economics
• Online Access: https://ink.library.smu.edu.sg/soe_research/1217; https://ink.library.smu.edu.sg/context/soe_research/article/2216/viewcontent/trade_edu2008_1_29.pdf
• Institution: Singapore Management University

This paper examines the inherent link between a countryís education system and its comparative advantage in trade. It suggests that di§erences in education systems across countries are probably a stable equilibrium result that is compatible with and reinforced by trade patterns. In equilibrium, two distinct types of countries emerge, one that exports creativity-intensive products and has an education system encouraging diversity (as illustrated by the US), and the other one that exports high-quality manufactured products and has an education system promoting homogeneity in student quality (as illustrated by Japan). Our Öndings present a novel explanation for the coexistence of low test scores of students and high economic performance in the US.